Time to Buy a House?

How ironic that the banks and brokers are taking such a beating when the very sector – housing – that started this mess just over a year ago seems to be turning up. At least the stocks are.

The HGX, the housing index Cramer follows, is up 44% from its low. It’s one of the main reasons that he’s anticipating a bottom for housing overall by June of next year. Housing stocks peaked about a year before the sector did, and Cramer’s thinking the reverse will also be true.

“I still think we still have a little ways to go before the fundamentals hit bottom,” he said.

There’s still plenty of housing inventory to work off, interest rates are down, pricing is at “rock bottom,” and consumer’s aren’t yet confident they should buy, despite the fact it’s “an unbelievably good time” to purchase a home, Dugas said.

But Dugas was hesitant to pinpoint exactly when the bottom would happen.

“I can’t call it any more accurately than anyone else,” Dugas said. “But it feels to me like the rate of decline is slowing and that we’re certainly approaching a bottom.”

Certainly Pulte’s improving business is a sign. Project cancellation rates for the company reached their highest level in 2007, but have been trending downward ever since. And the balance sheet is on par with Toll Brothers , another strong company in the sector. Pulte has no debt maturities until 2011 and $1 billion in cash. Dugas expects that to reach $2 billion by the end of the year.

If the 850,000 new homes that are usually created each year, but haven’t been because of the housing crisis, find their way back to the market – out of in-laws’ houses and friends’ places and rented apartments – then Pulte’s outlook just gets brighter.

“They’re not making anymore land last time I checked,” Dugas said.

And if you can legitimately afford it, who wouldn’t want to own a home? Given the way shareholders have been treated by recent government bailouts, having a house that can’t be taken away is an attractive investment right now. As Dugas said, homeownership has a “phenomenal benefit” over the long term.